TORONTO (Reuters) - Canada’s main stock index advanced moderately on Wednesday, helped by positive U.S. economic data and a pause in the rout of crude prices, which lifted market sentiment if not the shares of oil companies.
The rebound came after two straight sessions of sharp index declines with oil and gas shares getting hit by concerns about a global supply glut.
Crude snapped its four-day losing streak on Wednesday, but oil shares kept falling. Among them, Canadian Natural Resources (CNQ.TO) lost 2 percent to C$32.18, and Canadian Oil Sands COS.TO gave up 5.6 percent to C$7.99.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 38.23 points, or 0.27 percent, at 14,285. Eight of the index’s 10 main sectors gained.
Investors are anxious about sustainability of dividends from the oil patch if crude stays stuck in the current $50 range, said Elvis Picardo, a strategist at Global Securities in Vancouver.
“As of now you still have a large number of energy stocks that are offering double-digit dividends. But investors are on tenterhooks wondering when the next cut will be,” he said.
U.S. gasoline and distillate fuel stocks soared by the biggest amount ever last week, data showed, as the global crude oil surplus started to translate into swelling fuel inventories.
“There’s no question that oil has yet to find a bottom,” said John Ing, president of Maison Placements Canada. “It’s more of a trader’s game than an investor’s game.”
“Looking ahead, what’s going to be the price tag for oil? Is it going to be $80, $60 or $30? Until that is known, investing in the oil patch is only for traders,” he said.
Separate data indicated a drop in the U.S. trade deficit to an 11-month low in November as well as gains in hiring by U.S. private employers in December.
Signs of economic strength in the United States often lift sentiment in Canada, its biggest trading partner.
Telecoms rose 1.3 percent, with BCE Inc (BCE.TO) gaining 1.7 percent to 54.40. Consumer names also featured in the index’s rise, with auto parts maker Magna International (MG.TO) adding 2.7 percent to C$126.48 and Restaurants Brands International (QSR.TO), the entity formed from Burger King’s acquisition of Tim Hortons, up 3.8 percent at C$46.50.
Additional reporting by John Tilak; Editing by Jeffrey Benkoe and Peter Galloway